Cytologically, heterochromatin is defined as condensed chromosomal regions that are differentially stained, while molecularly, it has a broad impact on chromosome segregation, recombination and gene expression. Transposable elements are an integral part of heterochromatin in most if not all eukaryotes, but their role in chromatin modification is poorly understood. We will examine the proposition that heterochromatin silences genes by virtue of transposon mediated gene regulation, using Arabidopsis thaliana and the fission yeast S. pombe as model systems. We will use genomic tiling microarrays to assay DNA and histone modification, as well as transcription, along Arabidopsis chromosome 4. We have demonstrated that the chromatin remodeling mutant decrease in DNA methylation 1 (ddml) has major effects on the relative distribution of histoneH3 methylated on lysine 4 and lysine 9 in an isolated, transposon-laden region of heterochromatin. We will use forward and reverse mutagenesis to identify novel loci that have similar effects on different classes of transposons. In fission yeast, we have shown that heterochromatic centromere repeats are transcribed, and that the transcripts are substrates for RNA interference. Mutants in RNAi are defective in centromere silencing and function, and they fail to recruit histone H3 methyl lysine 9 (a hallmark of heterochromatin) to the centromeric repeats. We will investigate the molecular and cytological basis for this effect in fission yeast. Preliminary data suggests this mechanism is conserved in Arabidopsis. We will use each system to explore the ancient role of heterochromatin in chromosome biology.